Some slash budgets, some get breathing room with state school funding

Norm Fjelstad didn’t hesitate when asked if this is the toughest budget he’s worked on in his 21 years as Edgerton schools superintendent.

“No question,” he said. “It’s one of the most frustrating, most difficult and hardest on the staff.”

School districts all over the state are scrambling to adjust their budgets for the 2009-10 year after state lawmakers cut general school aid by an average of 3.1 percent per district.

The timing of the cuts imposed by the state limits the options for school districts to cut their budgets. The bulk of school spending is for teachers, but in many districts the deadline to lay off teachers has passed.

That leaves school boards to find savings elsewhere. Some will raise property taxes to compensate for the loss of state funding.

Edgerton is feeling the pinch more than most. It will receive more than $1 million less in 2009-10 than it did in 2008-09, a drop of 10 percent, according to a state estimate.

It’s just the latest hit for the district, Fjelstad said.

Last fall, the board approved the layoffs of eight teachers and five support staff in 2009-10 after declining enrollment and a new funding formula hurt district revenue.

Fjelstad now is recommending additional cuts: three support staff positions, one custodial position and $50,000 from the maintenance budget. The board will vote on the recommendation Monday.

The addition of one support staff position and one special education teacher through stimulus funding will help offset the cuts, Fjelstad said.

“It’s kind of like the snowball is rolling downhill, so we were ready,” he said. “We were preparing for (the decrease) as early as March … We just didn’t know how big it would be.”

The contract deadline to cut teaching positions in 2009-10 has passed, but Fjelstad will recommend the district cut five more teaching positions in 2010-11.

“I know our staff is feeling the pinch for what we have to do to cut back,” he said. “From every position from my job to custodians, and everything in between, you’ll find that people are doing more with less.”

School officials around the state are feeling similar pains from the first cut in state aid in many a decade, but not in Janesville.

Janesville

Janesville is one of 90 school districts looking at a probable increase in state general aid despite the cut in the state budget. The other 336 school districts in Wisconsin likely will see cuts.

Janesville’s general state aid—its biggest single revenue source—will rise 1.4 percent in the coming school year, according to a state estimate. That’s an increase of nearly $1 million from last year’s $67.51 million, if the state’s estimate proves true.

What all this means for property taxes in specific districts remains unknown.

General aid is a big part of most school districts’ finances, but it’s not the only source of revenue. School districts operate under state-imposed revenue caps, but the caps are high enough that school boards could make up at least some of their shortfalls by raising taxes.

The Legislative Fiscal Bureau on Monday estimated that school tax levies would increase by 8.1 percent statewide in the coming year and by 5.5 percent for taxes paid in 2011. But that’s a statewide average. Individual districts’ results will vary.

“It goes without saying that property taxes will go up. It’s almost a mathematical truism,” said Todd Berry of the Wisconsin Taxpayers Alliance.

Those tax hikes are on the way despite lawmakers’ assurances that they built a state budget that holds the line on taxes.

But maybe not in Janesville, where officials have been working for months on cuts, pay freezes and other moves that would hold the property tax increase well below the maximum allowed by law.

“With the economic situation our community is in, I think we really need to try to hold taxes in line as much as possible,” said Janesville School Board President DuWayne Severson. “A lot of people are hurting, and whatever we can do to make ends meet without having to bump taxes has got to be the goal.”

Board member Bill Sodemann agreed and said he’d like to try for a no-increase budget.

Board member Lori Stottler agreed that taxes must be kept to a minimum, but at the same time, “this board understands that the school system is one of the best things we’ve got going for us … in attracting strong businesses to our community, that will pay a decent wage.”

Although the Janesville School District is getting a 1.4 percent increase in state aid, district planners had project about a 3 percent increase. The challenge now is to make up the difference.

Even if the school board taxed to the maximum allowed by the revenue cap, the budget would have a $771,000 shortfall that would have to be made up some other way, Janesville district comptroller Lauri Clifton said.

The most obvious ways to plug the hole are cutting more expenses or dipping into a rainy-day fund known as the Fund 10 balance.

The formula

How can some districts receive more aid this year after lawmakers cut general school aid? The answer is a formula that’s used to divvy up this pot of state money.

Two of the factors driving the formula are enrollment and property values. The formula gives more money to schools whose enrollments rise, and it rewards those with relatively low property value per student.

Janesville won on both counts.

Janesville property values didn’t rise as fast as the state average, said Patrick Gasper, spokesman for the state Department of Public Instruction. And, Janesville boosted enrollment last fall by starting a 4-year-old kindergarten program, known as P4J.

Clifton was cautious when asked if this is good news.

“I would say it’s too soon to tell, but we are benefiting by adding the P4J program,” she said.

Meanwhile, districts with relatively high property values, such as Madison and parts of Walworth County, are looking at 15 percent cuts in school aid.

Milton

The Milton School District is trying to fill an estimated $1.2 million shortfall with minimal teacher cuts.

The district sent preliminary layoff notices for the equivalent of 2.6 full-time positions in June, but in July the school board voted to eliminate the equivalent of just 0.55 positions—a 0.25 position in art and a 0.3 position in music. The move will save the district $45,000.

Milton will receive nearly $800,000 in stimulus funds for reading support, special education and preschool entitlement programs, but the money won’t help in other areas, Business Manager Dianne Meyer said. At the same time, it’s seeing a 2.3 percent decrease—about $500,000—in general aid next year.

Meyer and Superintendent Bernie Nikolay have said all options—including administration, support staff, supplies and athletics—are on the table as the district looks to fill the rest of the gap.

On top of that, the district doesn’t know what it will pay teachers next year. Contracts expired July 1, and the district has filed for mediation because it can’t come to an agreement with the teachers, Meyer said.

The school board will hold a special meeting Monday, July 20, to talk about the budget. President Rob Roy believes the board will approve a tax increase of some kind but less than the state-imposed maximum.

“I don’t think we can go zero (increase) based on the other losses we’ve had this year,” Roy said.

Meyer hopes to present a draft budget to the board before the July 20 meeting, she said.

More work to do

School districts won’t know their actual state aid amounts until later this fall. Meanwhile, districts have to plan their budgets as best they can. Their deadline is the end of October, when they must set their tax levies.

“It’s not this year that’s going to hurt. It’s when our property values start to bottom out,” said Stottler of Janesville. “ ... It is going to hurt in 2010. There’s no doubt that being a board member in 2010 is going to be painful.”

The Janesville School District’s budget is like a jigsaw puzzle with pieces missing.

This year’s puzzle has more missing pieces than usual, so much so that the school board has postponed its public budget hearing from July to October.

Here’s a summary of some of the more important puzzle pieces.

Enrollment: The budget wouldn’t take a hit if enrollment declines when it’s counted next, on Sept. 18. That’s because rules for state aid include a hold-harmless clause, said comptroller Lauri Clifton. The clause is in effect for only one year, however, so a reckoning would come in the 2010-11 budget.Title 1: This federal program, which seeks to improve education in areas of low income, will get an extra $1.15 million through the stimulus funding bill. The bad news is that the money comes with strings attached. Little of it can be used to pay for existing programs. Rather, it must be used on new initiatives. The district is developing ways to spend the money to improve student achievement, Superintendent Karen Schulte said.Special education: Stimulus funding of $2.43 million will bolster the regular allocation for children with disabilities. Again, much of the money must be spent on new programs, but there is some flexibility. Officials still don’t yet know how much of the money might be used to pay existing expenses. Officials also need to decide how much of the stimulus funding they’ll use in the coming year, and how much they’ll hold over for the following year.Categorical aids: This state funding source pays for several programs. Lawmakers cut categorical aid by 3.5 percent, but the local impact is not known, yet. It appears that special-education aid, the biggest part of categorical aid, will be protected, but transportation and English language learners funding could take hits, Clifton said.Teacher compensation: Negotiations continue on a new contract, which represents the district’s single biggest expense. The district’s opening offer was a pay freeze in the coming year and a 1.34 percent increase in 2010-11. Whether new changes in the laws governing teacher-contract bargaining will have an effect remain unknown. Negotiations are being held behind closed doors.—Frank Schultz